It is important to note that not all data collected from each company was used in every statistical calculation. This report represents the most comprehensive single source of data on a diverse industry over a broad geographic region and within multiple markets and is based on the best available data.
Size of the Market
MBI estimates that there are about 530,000 code compliant relocatable buildings in use in North America today. Public school districts across North America collectively own and operate about 200,000 relocatable classrooms, with the industry owning and leasing about 330,000 buildings. Additionally, many construction companies own a fleet of construction offices that move from site-to-site. These figures do not include noncoded units such as personal storage units, although these units typically make up about 15 percent of a provider’s fleet.
The four largest fleet owners control more than 80 percent of all industry owned units in North America. Those companies include WillScot, Mobile Modular Management Corporation (McGrath Rentcorp), Pac-Van, and Mobile Mini (steel ground level offices). The next 10 largest companies own approximately 15 percent of the industry owned fleet, while the remaining 50 or so companies own less than 10 percent of all units.
Across all sizes, the average (mean) fleet size for North American fleet owners in 2018 was 6,118. However, the median number of units from this data set was only 501. This demonstrates an even greater disparity between the large and smaller companies than the prior year’s report.
The percent of units owned varies greatly by region as some of the larger players are more heavily concentrated in certain regions and less in other regions, while some of the mid-sized companies are state or region focused. For example, a company with 1,000 units in a smaller region may have a greater local market share than a large fleet owner that is less active in that same region.
Additionally, there are very few “large customers” for relocatable buildings. For example, WillScot states in their year-end financials that they have 50,000 customers and no customer accounted for more than four percent of revenue. This regionalization of markets and diversity of customers keeps the market competitive despite mergers and consolidations.
Each year, MBI compiles data about the modular construction industry and each year, the public wants more information and detail. One of the challenges in gathering this data is the diversity among the industry participants. Modular construction in and of itself is not a NAICS category. Rather, our industry tends to fall under one of several NAICS categories including:
321992 – pre-fabricated wood buildings and structures
332311 – pre-fabricated steel buildings and components
236220 – commercial building construction
531120 – commercial building rental or leasing
In general, relocatable buildings, if property maintained and operated, have useful lives comparable to any other building type. Capital improvements, such as HVAC replacement and roof replacement, are frequently made to these units, which can extend their useful lives for several additional years.
A typical relocatable building will be moved an average of seven times over its life. Again, this varies based on the size and type of the unit. For example, a smaller building made up of one or two modules may move 12 to 15 times over its life. Construction site offices are good examples of this. Larger complexes, on the other hand, may only move three to five times over their life.
Eighteen companies provided data on the average age of a unit in their lease fleet, with a median (average) of approximately 11 years.
Average Lease and Sales to Original Cost Ratio
Our findings indicate that in order to recoup the initial capital investment in a unit, a fleet owner typically needs to have the unit on lease for about 44 months. The average lease term per customer is 24 to 28 months. Once the initial investment is recouped, it is not uncommon for a fleet owner to continue leasing the unit to recover the investment a second time, and finally sell the unit
(on average after seven to 10 years).
Over the last 10 years, the average sale price of a relocatable building has exceeded 100 percent of its original cost, demonstrating that these units retain their value well. There are many factors in determining value and sale price, including the escalating cost of constructing new units to later versions of the building codes. Another key factor is the proper operation and maintenance of the unit over its life.
Sources of Revenue by Product or Service
Revenue from fleet operations reported from MBI members totaled just over two billion dollars in 2018. Five of these companies had revenues in excess of $100 million, eight companies had revenue between $10 to $100 million, while 28 had revenues of $10 million or less. The median revenue for this data set was five million dollars while the mean average was $44,826,030, indicating a wide disparity among the size of companies in the data set. All financial information is in U.S. dollars unless specified otherwise. Companies reported their 2018 revenue was generated from the following markets:
Companies engaged in the relocatable building sector generally derive most of their revenue from the lease of units (approximately 70 percent in 2018). Other sources of revenue include delivery, installation and rental of ancillary products such as stairs and ramps (approximately 20%) and sale of new and used units (approximately 10 percent).
Despite the growing control of the industry fleet by a handful of larger companies, the day to day operations of the industry are still very much regional in nature. Typical clients include general contractors and school districts, seeking temporary and cost-effective solutions for space needs. In any given market, the larger companies must still compete with several smaller fleet owners serving the region. Drivers of relocatable buildings often include availability and quality of the product, price, and service.
The differences in state building codes also prevent a larger player from “flooding the market” and shipping in excess product from another region. Given that all relocatable buildings have to meet the wind, snow, and seismic conditions where they are to be located, it isn’t practical for any company to build one type of building that will meet every possible local condition. For example, a relocatable building that meets the wind zone requirements in Florida may not be suitable for the seismic conditions in California, or the snow loads in New York.
When asked about depreciation and residual values of the lease fleet, responses varied based on condition and capital improvements to the fleet, market use of the fleet, and the composition of the types of units in the lease fleet (construction offices, classrooms, etc.). A majority of the units in the industry lease fleet are depreciated over a 20-year period with a 50 percent residual value.
The economic life (different than depreciable life) of a leased relocatable building is determined by comparing the total cost of maintaining the asset with the income producing capacity over its useful life. Cost includes the initial manufactured cost plus all expenditures for items such as maintenance and taxes incurred during its life. Income includes lease revenue during the building’s useful life and sale value upon disposition. Residual value is understood to be the anticipated “value” of the building at the end of the lease. The mean annual depreciation has ranged between five and six percent for the last several years.
Industry utilization is defined two ways:
Dividing the total number of units on lease by the total number of units available to be leased.
Dividing the cost of the units on rent by the total cost of the equipment available.
For purposes of this report, MBI calculates utilization by number of units on lease divided by total number of units on a given date. Industry data obtained directly by MBI from 30 companies show an overall utilization rate at 12/31/18 of 77.4 percent, across all markets, slightly up from 77.3 percent reported in the prior year. Among the 24 reporting companies with at least 100 units in their fleet, utilization was 77.1 percent for year-end 2018.
Canadian Market Overview
MBI represents 62 companies based in Canada, including 26 manufacturers of modular structures and 14 companies engaged in the relocatable buildings sector, and suppliers of materials and services (with some overlap among company types). In all, MBI estimates that there are about 45 total modular manufacturers in Canada fabricating for a variety of markets including residential, multi-family, commercial, educational, and industrial sectors. There are also an estimated 15 or so smaller fabrication warehouses doing renovations and modifications for various markets.
MBI surveyed and obtained data from all Canadian member companies actively engaged in the relocatable building industry, however not all companies provided data for all calculations. For example, MBI obtained revenue data from 14 companies, employment data from 13 companies, lease fleet data from 10 companies, and capital expenditure data from six companies. When possible, this data was applied to the total number of industry participants to gauge the overall industry size in Canada.
SEDAR (www.sedar.com) is the official site that provides access to most public securities documents and information filed by issuers with the 13 provincial and territorial securities regulatory authorities (“Canadian Securities Administrators” or “CSA”) in the SEDAR filing system. MBI obtained information from annual filings on the following companies:
ATCO Ltd. was incorporated under the laws of the province of Alberta and is listed on the Toronto Stock Exchange. Its head office and registered office is at 4th Floor, West Building, 5302 Forand Street SW, Calgary, Alberta T3E 8B4. ATCO Ltd. is controlled by Sentgraf Enterprises Ltd. and its controlling share owner, the Southern family.
Black Diamond is headquartered in Calgary, Alberta. The Company was incorporated in Alberta on October 7, 2009. The address of the Company’s registered office is Suite 4600, 525 – 8th Avenue S.W., Calgary, Alberta, Canada. The common shares of the Company are listed on the Toronto Stock Exchange (TSX: BDI).
Horizon North Logistics Inc. is a corporation registered and domiciled in Canada and is a publicly-traded corporation, listed on the Toronto Stock Exchange under the symbol HNL. The Corporation’s registered offices are at 900, 240-4th Avenue SW, Calgary, AB T2P 4H4.
MBI also gleaned information from SEC filings from Civeo, Willscot, and General Finance (Pac Van) to supplement the member survey.
In Canada, a majority of industry-owned relocatable buildings are controlled by a handful of large, multi-national corporations with diverse revenue streams. It is not uncommon for a Canadian company to also generate revenue from the manufacturing of modular units, from hospitality-related services attributed to workforce housing accommodations (i.e. facility service and catering), or from construction projects such as multi-family housing developments. To the greatest extent possible, MBI separated and did not include revenue from construction projects nor facility services for purposes of this report. This data focuses on the leasing and sales revenue of relocatable buildings and equipment.
The Canadian relocatable building (RB) market is different than the U.S. market in many respects. Key Canadian RB market characteristics:
• RB inventory concentrated in a smaller number of multi-national corporations.
• Corporations have more diverse revenue streams.
• Historically, oil, gas, and mining/extraction industry drove demand for RBs.
• Codes and regulations outdated/misunderstood by local code officials and regulators.
• Industry diversifying after latest oil downturn.
Historically, the Canadian RB market has been heavily influenced by the oil, gas, mining, and other resource extraction industries. As such, companies engaged in this sector often have business interests in the United States, South America, and Australia where similar markets exist.
Within the workforce housing accommodations market there are various segments or business models that serve components of the overall value chain, including:
Public and private firms, such as ATCO Structures & Logistics, Horizon North Logistics Alta-Fab Structures, and Northgate Industries, that build the modular accommodations for sale. One company estimates that customer-owned rooms represent over 50 percent of the market.
Horizon North, Black Diamond, ATCO, Royal Camp Services, and WillScot primarily own and lease the units to customers and in some cases provide facility management services, usually on a shorter-term basis.
Facility service companies, such as Aramark Corporation, Sodexo, and Compass Group, typically do not invest in and own the accommodations assets, but will provide hospitality services at third-party or customer-owned facilities.
Some companies, such as Civeo, generate revenue from serving all components of this value chain. Again, MBI separated and did not include revenue from facility services for purposes of this report.
The western market has experienced a prolonged economic downturn due to lower oil prices and delays in capital projects from large oil and gas companies. The demand for equipment rentals and workspace solutions largely depend upon the level of industry activity for oil and natural gas and mineral exploration and development and infrastructure development. The lower oil prices caused many companies to lay off workers, reducing the need for accommodations.
As such the utilization rate for equipment in this space has declined significantly over the past few years, driving some companies to expand their markets.
Within the resource sector, liquified natural gas (or LNG) provides some new opportunities for growth. Around 2008, dramatic changes in the North American natural gas market began, driven by surging U.S. unconventional natural gas production (mostly from shale gas). This changed the outlook for LNG imports. Natural gas production increased, North American prices fell significantly, and the expected need for imported LNG collapsed. In fact, LNG exports began to be contemplated.
As unconventional gas production increases, the U.S. is becoming increasingly self-sufficient with respect to natural gas. Pipeline exports from Canada to the U.S. are decreasing. With ample unconventional resources, industry has shifted its focus from importing LNG into North America to exporting LNG from North America. The export of LNG could facilitate
Canadian natural gas production
growth and result in
significant investment, jobs,
and economic growth.
Eighteen LNG export facilities
have been proposed in
Canada – 13 in British
Columbia, two in Quebec,
and three in Nova Scotia.
Since 2011, 24 LNG projects
have been issued long-term
export licenses. Canada’s
only operational LNG
terminal (an import terminal)
is Canaport LNG’s regasification
located in Saint John, New
Brunswick. (Source: Natural
Today, customers of
include a diversified client
base of general contractors,
real estate developers,
businesses, education providers,
and companies involved
in the resource industry.
Common product offerings
include “single wide” office
units, storage units, large
multi-unit office complexes,
The market for relocatable
buildings varies from
Eastern to Western Canada,
with workforce housing
supporting the oil industry
still a significant driver in the
West. In the East, the market
is more diverse including
support structures for
natural resource industries
as well as educational
MBI expects to see greater
diversification away from
the resource sector and into markets such as construction site offices, educational units, and retail units. These markets typically generate a recurring revenue stream with average lease durations of 12 months or greater; return the original equipment cost through revenue within four years on average; and require lower maintenance costs than units used for the resource sector.
A recent industry effort to develop a national standard for relocatable buildings will help to provider greater predictability and certainty for end users of these products in Canada.
Today, only the Alberta Building Code (ABC) has requirements that specifically address any relocatable buildings. These requirements were first included in the 1977 ABC and are substantially unchanged. The application of the requirements is limited to Group C (residential excluding buildings with dwelling units), Group D (business and personal services), and Group F Division # (low hazard industrial), and only when serving a workforce in a “temporary location.”
Municipalities and districts in the Provinces of British Columbia and Saskatchewan have been accepting relocatable buildings that comply with ABC Part 10. However, the Province of Alberta has recently stated their concerns about these requirements as being “outdated.”
Typically, each municipality is left to interpret how current building code requirements do or do not apply to relocatable buildings. There are numerous requirements in the National Building Code (NBC) and the provincial/territorial building codes/regulations that should not apply to relocatable buildings or should be less stringent. Conversely, there are also requirements that should be more stringent.
Based on Part 10 of the Alberta Building Codes, CAN/UL2600 is a national standard for the construction of RBs. The industry is working to get this standard adopted into the National Building Codes and at the local levels.
» The average annual corporate revenue attributable to the relocatable buildings sector in Canada in 2018 was $30,603,775.
» Overall utilization rate decreased to 60.6 percent, from 65.1 percent the prior year, exclusive of workforce housing rentals.
» Including workforce housing lowers the overall utilization rate to 49.5 percent as that sector has been in decline for the past few years.
» In 2018, Canadian companies invested over $50,000,000 in capital expenditures for relocatable buildings.
» The RB sector of the modular industry directly employs between 4,000-5,000 people and paid between $12 - $15 million in federal taxes in Canada in 2018 (excluding local, provincial, property, and payroll taxes).
» Overall demand for relocatable buildings remained strong in 2018, as demonstrated by the 77.4 percent overall utilization rate, up slightly from
77.3 percent in 2017.
» On average, sale price to original cost ratio has exceeded 100% for the past decade, demonstrating the ability of the existing relocatable building inventory to retain their value.
» Revenue mix was generated from roughly the same market segments with about two-thirds of the industry revenues coming from relocatable classrooms and construction site offices.
» Mergers and consolidations have concentrated a higher percentage of total units owned into the hands a just a few companies, with four companies now owning over 80 percent of the U.S. fleet.
» Customers in all these markets will continue to utilize relocatable buildings for their speed, flexibility, practicality, and cost.